Kontron restructures to cut loses

Business news |
By eeNews Europe

The company is set to lose €32m on a turnover of €550m this year. “Like other companies we are confronted with reluctance in the government to spend money because of the debt crisis and weak economies in EMEA,” said Rolf Schwirz, new chairman of the management board and CEO of the group (above). The problem was that Kontron was a tightly coupled system of 9 or 10 different entities all led by strong CEOs with full command over the value chain and very knowledgeable in their markets, says Schwirz. This had been built up over the last decade through acquisition such as PEP Modular Computers and Intel’s rack business.
“What we see now for the next phase of corporate development we need to completely change the way we do business, and we are now in the middle of building a new organization from April 1st,” he Schwirz. “It’s a big transformation.”
The new structure sees four business units for industrial and automotive, communications, military, avionics and rail and multimarket. These units will all be supported by group sales, research and development, operations and support. Kontron is also looking to increase its indirect business through distribution.
“The benefits of this organization are really huge,” said Schwirz.“ We have gathered together over 1000 engineers and they all belong to a global group now. We also have 20 contract manufacturers and maybe we can leverage some advantage if we can reduce that number.” The company employs 2900 staff wordwide.
The company is also setting up a Venture unit. “Kontron Ventures is to identify innovation to enhance and improve our products and services stack,” said Schwirz.
 Two private equity firms have increased their stakes in the copmpany over the last year and now own around 35%. “They will help us transform Kontron and maybe a little bit more,” said Schwirz. Investment firm Warburg Pincus is the single largest shareholder in Kontron with nearly 20%, alongside investments in Shanghai RF chip designer RDA Microelectronics, Dutch cable TV operator Ziggo, US department store Neimen Marcus and Chinese fast food startup Dumpling King. The other investor is Triton, which focuses on northern European companies such as German elevator maker Wittur and window and door maker Weru.


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